WRAPUP 1-Australia floods close more coal mines, rail line

* New Hope suspends operations at Queensland mines

* QR National closes rail line, cutting off Peabody mine

* Buyers of Aussie coal look elsewhere as floods worsen

* Coking coal prices could soon hit record – Moody’s

By James Regan and Rebekah Kebede

SYDNEY/PERTH, Jan 11 (BestGrowthStock) – Australia’s
flood-stricken coal sector suffered more setbacks on Tuesday
as monsoon rains flooded out another rail line and forced more
collieries to close.

New Hope Corp — until now untouched by the
flooding that affected the operations of more than 40 coal
mines further north — suspended all operations on Tuesday as
the rains transformed southeastern districts into inland seas,
shutting another 6 million tonnes of thermal coal capacity.
[ID:L3E7CB021]

Asian buyers of Australian coal — a mainstay of the
national economy — are increasingly turning to alternative
suppliers as far away as the United States and South Africa,
as forecasts show the rains are set to continue.

“People are turning their minds towards months rather than
weeks for mine and operation repairs,” UBS commodities analyst
Tom Price said.

A South Korean utility had bought a cargo of South African
coal to make up for lost Australian supplies, a source with
knowledge of the deal said. [ID:nTOE70A07H]

“We are still looking for March-loading supplies. We think
it’s better to play it safe since we don’t know how long the
disruption in Australia would last and there’s a chance that
Indonesia could also be affected once the wet season comes,”
said a source from one of the country’s utilities.

Queensland’s coal outages represent about 41 percent of
the world’s metallurgical coal exports and 8 percent of the
world’s thermal coal exports, according to Australia & New
Zealand Bank.

Three quarters of the state has been declared an emergency
zone because of the floods, which have killed 13 people and
caused widespread evacuations, according to police.
[ID:nL3E7CA224]

COAL PRICE SQUEEZE

Global metallurgical coal prices could soon exceed the
record highs of 2008, when heavy flooding last hit Australian
collieries, Moody’s said in a special report.

Thermal prices were also set to climb, Moody’s said.

Direct losses from the rains that started in November and
have left much of the eastern state of Queensland underwater,
are estimated by Moody’s at around $2 billion so far, but will
most likely climb higher once the full impact of the
devastation is assessed.

Wesfarmers Managing Director Stewart Butel said the
flooding continued to significantly impact metallurgical coal
production at its Curragh mine and that rail operations were
unlikely to resume before mid-January 2011 at the earliest.

A Dec. 10 force majeure remains in place for export and
domestic contracts.

Another mine, owned by Peabody was also cut off
after QR National shut another railway line
.[ID:nSDY6CE7X4]

Shares in New Hope fell 2.8 percent, while QR National
shares tumbled 3.3 percent.

In central Queensland, where coal mining has been
start-stop for weeks, some coal exports were still being
shipped out of Dalrymple Bay Coal Terminal and Gladstone Port,
but concerns were mounting that supplies would run out unless
mines restart soon.

“We’re fully dependent on how much the mines can provide.
If their production and stockpiles are getting low, then
obviously that will trickle through to us,” said Jesse Knight,
operations analyst at Dalrymple Bay Coal Terminal.

As of Tuesday, Dalrymple held enough coal to only load
four of 39 vessels waiting off the port.

Gladstone Port said on Tuesday it had not received coal
for export since last week and was loading some coal for
export from stockpiles of around 500,000 tonnes. The port
normally holds 6 million tonnes in stock.

A South Korean buyer has booked a cape-sized
February-loading thermal coal shipment from South Africa
between $138 and $140 a tonne CFR (cost-and-freight) late last
week, a source with knowledge of the deal said on Tuesday.

The price was based on coal with a heating value of 6,080
kcal/kg (NAR), said the source, who requested anonymity as the
deal was commercially sensitive.

Trade sources said a South Korean utility had also
recently booked a cape-sized shipment from Canada.

The South Korean government recently held a meeting with
executives from the country’s five state-run utilities to
discuss the impact of Australia’s floods on
supplies.[ID:TOE70A050]

(Additional reporting by Fayen Wong in Shaghai; Editing by
Michael Urquhart)